Beef Industry Coming Back

Beef Industry Coming Back Created by rrummel on 7/23/2013 4:06:46 PM

Economist Expects Slow Recovery

Purdue University Extension Economist Chris Hurt says the beef industry is about to reverse a downward trend in numbers as prospects are brightening for a renewal of pastures and a welcomed reduction in feed prices. He notes pastures and ranges have returned to favorable conditions for much of the country. Improvement is also noted for the Central and Southern Plains - though drought conditions are still lingering. Hurt points out 73-percent of pastures nationally are rated in the fair, good or excellent condition this year - compared to just 46-percent at this time last year. Hurt adds that markets are expecting feed prices to drop sharply when new crop harvest gets underway. In some parts of the country - where pastures have been restored - Hurt says beef cow operations are likely getting ready to retain heifers. Hurt says the Southeast - where beef cow numbers have declined about 12-percent since 2007 - and the Midwest - where numbers have dropped about 14-percent in the same time period - should have the pasture and feed to begin heifer retention. He says the Northern Plains is another area ripe for herd expansion. Hurt says more rain and more pasture and range improvement is needed in the Central and Southern Plains and western United States.

Hurt expects the initial retention of heifers this fall in areas primarily east of the Mississippi River - plus the Delta, the western Corn Belt and the northern Great Plains. This area currently has 57-percent of the nation’s beef cows. Hurt says lower feed prices won’t be enough to start retention. He says higher calf prices will also be needed. While he says that process is underway - Hurt believes the current levels aren’t likely to stimulate any major beef cow herd expansion. He says prices of $1.75 to $2.00 per pound may be required to convince brood cow operations to move aggressively toward more cows.

So the industry may see the start of heifer retention this fall - but Hurt says the magnitude of expansion is expected to be low and slow to get under way. He notes beef cow producers know that expansion is a long-term investment and generally want an extended period of favorable returns before making major financial commitments. To provide the incentive that will provide for a more major beef expansion - Hurt says calf prices may need to move closer to two-dollars per pound.